Profits flow for leading orange juice producers

PUBLISHED : Saturday, 26 February, 2011, 12:00am
UPDATED : Saturday, 26 February, 2011, 12:00am

Tianyi Fruit Holdings, the mainland's largest orange juice concentrate producer, expects production to rise by 25 per cent next year after it acquires a major juice processing plant in Hunan in the coming months.

Tianyi's chief financial officer Hu Wu said the deal will cost between 300 million yuan (HK$355 million) and 400 million yuan, although the parties have not yet finalised the details.

The announcement came as the prices of concentrated orange juice jumped by 25 per cent to 18,000 yuan per tonne in the past two months. Since June last year, prices have risen more than 60 per cent. Orange prices surged 50 per cent during the six months to December.

Last year's bad weather was blamed for a drop in the supply of oranges, hence the higher prices, but Hu expects a good harvest this year.

'Demand for orange juice concentrate will continue to grow on the mainland,' he said.

'Since the market at present is still largely occupied by imports, there is ample room for the development of local manufacturers.'

The company said net profit jumped 43.1 per cent year on year to 131 million yuan in the six months to December, of which 124 million yuan came from juice sales.

Tianyi is hopeful that the second phase of its juice processing plant in Chongqing will be operating before the end of the year. The expansion will more than double the production of bagged juice to 50,000 tonnes a year from 20,000 tonnes.

Meanwhile, the surge in orange prices has boosted profits for Asian Citrus Holdings - China's largest orange producer, which owns three orange plantations. In the six months to December, Asian Citrus said net profit more than doubled to 523.4 million yuan owing to good yields and increased direct sales to supermarkets. The company's recently acquired orange juice concentrate processor, Beihai Perfuming Garden Juice, started generating profit in December.

Asian Citrus will build a new plant for the company in Guangxi by the end of this year, which could boost the company's annual juice production by 40,000 tonnes.

Finance director Eric Sung said he expected the new business to eventually contribute about a third of the group's net profit.

Shares of Asian Citrus closed 3.04 per cent higher at HK$8.80 yesterday, while Tianyi remained unchanged at HK$2.68.